If I understand the article correctly, the insurance is not itself fraudulent. The scammer buys real insurance, gets a legitimate card (or decal? I’ve never seen an insurance decal, but okay) to give to the victim, then stops making payments so the company cancels the policy that the victim is driving around with proof of.
(I gather that the notice of cancellation gets sent to the “agent” instead of the policyholder, which seems weird to me, but then the whole idea of needing an agent to buy car insurance in the 21st century is pretty weird too.)
At least part of it is that Michigan has unlimited payout for injuries. I’m not sure how much that contributes, but that’s part of it. It’s also a fairly poor state with about 15% of people uninsured, so there’s a smaller pool of money with potentially huge payouts to/because of uninsured drivers in accidents, so that doesn’t help either.
Oh, it’s certainly possible(indeed likely) that some of the holders of the estimated 20% fraudulent documents are in collusion with the fraud; the cottage industry of producing and selling known-fake papers of various sorts is certainly real.
However, it is far from clear that all (or even the majority) of the holders are in on the fraud. Inconveniently, the innocent are likely to be the ones who got screwed hardest. Anyone buying ‘insurance’ for 5 or 10 percent of approximate market value is going to have a hard time arguing a good faith belief in its legitimacy. 80-90 percent, though? insurance pricing isn’t always terribly transparent, so that’s not a giant red flag.
Aside from the rapacious ‘asset forfeiture’ bullshit being overtly unjust, it also seems counterproductive: unless insurance documentation is so trivial to forge that it’s a DIY operation, even the drivers who are in on the fraud are going to be dependent on a smaller number of more sophisticated middlemen who know how to produce reasonably believable papers. The honest marks, of course, weren’t trying to obtain fraudulent insurance, so they were conned by somebody. In such a situation, playing whack-a-mole with impecunious end users seems cruel, pointless, and likely to alienate the people who have the most information on the high value criminals in the situation.
It’s not as easy as just stealing cars; but the forgers and the scammers are the ones you really want to crush, both in order to curtail the supply of reasonable quality fakes and protect the innocent. The other seemingly-obvious step, not sure why this hasn’t already been done, is insurance companies who do business in the area being more visible to the customer. Middlemen have their uses; but they are also the source of risk and fraud. Ideally, you’d want contacting the company providing the alleged insurance to verify the authenticity of the agent and the offer to be very easy and a matter of common knowledge, both to cut back on the imposters and to reduce the scope of the ‘pretending to have been an honest victim’ defense for those who are in collusion with fraud.
similar situation in the UK… if HM police force catch you with invalid insurance, your car will be seized and destroyed (no chance to even buy it back)
@Mister44: I’m not sure this is even a legal practice, but yes, the communities listed on the flier are pretty hard up for cash.
@anon62122146: Yes, yes they have. Recently there have been commercials urging us to tell “lawmakers” to keep no-fault insurance to continue helping people severly injured in auto wrecks - sponsored by the insurance industry. My spidey-sense tells me they just want the gravy-train of inflated premiums to keep rolling.
I’m guessing that the conman gets the driver to fill out some sort of form with all the info needed to apply for insurance, and asks for a check made out to him for an amount in between a full year’s actual premium and the minimum initial payment needed to get a policy issued.
The conman then applies for the insurance directly with Progressive not as a legit agent, but posing as the driver herself, and makes the first minimum payment on her behalf. But by the time the next payment comes due and the policy gets canceled, he’s long gone.
